India and France sign nuclear deal

French company to build two reactors at the cost of $9.3bn in India's Maharashtra state.

Sarkozy's visit to India comes as western economies look to India to recover from the global economic crisis [EPA]

India and France have signed a multibillion dollar agreement to build two nuclear power plants in India.

The agreement, valued at about $9.3bn, was signed on Monday in the presence of Manmohan Singh, the Indian prime minister, and Nicolas Sarkozy, the French president who is on a a four-day visit in India.

According to the agreement, one of France's main nuclear power companies, Areva SA, will build two pressurised reactors of 1,650 megawatts each at Jaitapur in the western Indian state of Maharashtra.

Al Jazeera's Prerna Suri, reporting from New Delhi, said the deal is much more significant for France than it is for India.

"France needs this deal because it's worth over 2bn euros for two nuclear reactors," she said.

"That's going to drum up jobs back home for them, it's going to infuse the [French] economy. For India, it's more about the regional significance that they are getting out of this."

Our correspondent also said there have been doubts over the operational success of the two reactors as "they are still not successful and there were lots of delays and cost overruns in this."

The deal marked the first two of 20 nuclear reactors India wants to build to meet its soaring energy demand.

Rising power

Recent visits by world leaders including Barack Obama, the US president, and David Cameron, the UK prime minister, have been indicative of the western world's recognition of India's status as a rising global economic power.

All these leaders have said during their visits to India that the key objective of their countries is to create jobs for their citizens back home through trade with India, clearly eyeing India as a country through which their economies can benefit.

But there have been concerns that India's recently passed liability law might prove too onerous for international companies to risk entering the market here.

Indian officials assured France that their liability laws were in keeping with international standards and the security of nuclear operators was ensured, a French official said.

According to our correspondent, domestic opposition in India "have also asked the federal government to add a clause for the nuclear liability in case there is an accident over here so France will be held responsible for it, which the French negotiators have been taking a strong stance against."

After the agreement was signed, Sarkozy and Singh met to discuss regional security, trade and investment.

The talks were also expected to touch on plans for the structural reform of the international monetary system through the Group of 20 countries, currently headed by France.

Sarkozy, who arrived in India on Saturday, is accompanied by his defence, foreign and finance ministers and nearly 60 business leaders.

The two countries are not expected to sign any defence agreements during the visit, but Sarkozy is likely to push for French companies to win contracts to supply military hardware.

India has so far not been allowed into the nuclear suppliers' group.

According to defence experts, India is expected to spend $80bn between 2012 and 2022 to upgrade its military.

The two countries have set a bilateral trade target of 12bn euros [$15.8bn] for 2012.